Rain impacts crop prospects

Steve Sloss
Steve Sloss

FEED markets and milling wheat spreads have reacted to improved east coast rain forecasts, as traders grapple with the potential impact on both summer crop planting prospects and wheat quality.

The wetter forecast has seen sorghum bids fall by around $6-7/MT this week, despite stable futures and currency markets, while the difference between "generic" milling grades and hard/prime hard qualities has widened - particularly in the Brisbane zone.

It is highly unlikely we are looking at a feed wheat event anywhere in Australia at this stage.

Feed barley and delivered 70/10 feed wheat markets are also slightly lower in the Brisbane and Newcastle port zones, but have held relatively firm in South Australia.

The rain front is gradually making its way eastward and at the time of writing has the potential to drop 20-50mm across much of the east coast grain belt from northern Victoria to southern Queensland. The rain has already passed through Western and South Australia, with key grain-growing regions in WA receiving between 10-25mm over the last week, with isolated falls of up to 50mm. Falls were generally less than 15mm in the South Australian grain belt and are unlikely to cause many problems.

With forecasts suggesting the pending rain is likely to be heaviest in southern and central New South Wales, where crops are still relatively green, it is highly unlikely we are looking at a feed wheat event anywhere in Australia at this stage. In these areas, any rain is likely to be beneficial on balance, helping to arrest any further yield decline.

The most vulnerable crop is probably in northern NSW, but it looks like the Narrabri/ Moree/Walgett triangle is unlikely to see more than 20-25mm for the week.

In southern Queensland and the Darling Downs, most growers are likely to welcome any rain now the bulk of the harvest is in the bin. In fact, a general 25mm would see a substantial expansion in sorghum planting - considering parts of the Western Downs saw half-decent storm rain at the weekend.

Sorghum appears to be the dryland summer crop of choice based on a "gross margin" comparison with dryland cotton - given the "official" planting window for GM cotton varieties is starting to draw to a close.

One thing's for sure - we'll have a much better handle on this week's weather impacts next week.

We'll also be a lot wiser with regards the outcome of the US election and pending USDA World Agricultural Supply Demand Estimates - both of which have kept offshore futures markets in a holding pattern.

A couple of key "potentials" to watch for in the USDA report include a reduction in US corn demand - considering the pace of exports and recent ethanol production numbers suggest these figures are overstated. Countering this, we would expect to see Australian wheat production estimates reduced, given the USDA has production pegged at 23 million MT.

Topics:  commodities markets steve sloss weather wheat

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